VISITING STAFFDEL MEETS NORINCO OFFICIALS

C O N F I D E N T I A L BEIJING 001203 SIPDIS E.O. 12958: DECL: 03/31/2017 TAGS: MNUC PARM PHSA PREL CH IR SY SUBJECT: VISITING STAFFDEL MEETS NORINCO OFFICIALS Classified By: Political Regional Unit Chief Mark Tesone. Reasons 1.4 (b/d) Summary -------------- ¶1. (C) NORINCO Vice President He Xiaodong told Senate Foreign Relations Committee staff members Frank Januzzi and Puneet Talwar that NORINCO can serve as an educator and lobbyist on the subject of export control compliance. VP He said NORINCO unilaterally stopped exporting "explosives" to Syria and convinced the MFA to ban all such exports from China. NORINCO has stopped selling arms to Iran and has nearly completely ended the company's 20-year relationship with that country. According to He, China has stopped all defense exports to Iran and Syria due to the Beijing Olympics, a prohibition VP He expects to last at least one year. End Summary. NORINCO's Role in China's Export Control Regime -------------- -- ¶2. (C) NORINCO Vice President He Xiaodong met with Senate Foreign Relations Committee staff members Frank Januzzi and Puneet Talwar on March 24. VP He said he believes NORINCO can serve as an educator and lobbyist on the subject of export control compliance both to the Chinese Government and the Chinese defense industry. VP He said he prepared a report to President Hu Jintao on U.S. sanctions against NORINCO before Hu's meeting with President Bush in 2003, and he has written reports to PRC leaders about the importance of internal compliance programs. He noted that China Great Wall Industry Corporation has already sought NORINCO's advice on export control compliance. ¶3. (C) VP He said NORINCO's annual revenue is roughly USD three billion and he expects it to double in two years, largely due to oil investments in Kazakhstan. Civilian projects make up 85 percent of NORINCO's revenue, he said. NORINCO, Syria and Iran -------------- ¶4. (C) VP He said his company unilaterally stopped exporting explosives to Syria, fearing they might be re-exported to Iraq. NORINCO then convinced the MFA to ban all such exports from China to avoid being singled out by the Syrian Government as uncooperative. According to VP He, NORINCO has also stopped selling arms to Iran and has almost completely ended the company's 20-year relationship with Tehran. Some NORINCO employees opposed this decision, arguing that Chinese law does not prohibit such exports and that other firms would step in and sell to Iran if NORINCO stopped exporting. VP He said the only business NORINCO presently has with Iran is manufacturing new cars for Tehran's subway system. NORINCO employees who used to work on Iran accounts are being moved to other divisions within the company, he said. ¶5. (C) VP He claimed that China stopped all defense exports to Iran and Syria due to the Beijing Olympics. He did not know how long the prohibition would last but estimated it would be at least a year. Defense Spending Should be More Transparent -------------- ¶6. (C) Januzzi impressed upon VP He the importance of transparency in China's defense spending. VP He agreed that China's defense spending should be more transparent in order to reduce tensions with the United States. They also agreed that there should be more dialogue between the United States and China on military spending. PICCUTA NNNN End Cable Text